Hall v Carney (No 2)
[2012] SASCFC 105
•17 September 2012
SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
HALL v CARNEY & ORS (No 2)
[2012] SASCFC 105
Judgment of The Full Court
(The Honourable Justice Gray, The Honourable Justice Vanstone and The Honourable Justice Stanley)
17 September 2012
SUCCESSION - WILLS, PROBATE AND ADMINISTRATION - PROBATE AND LETTERS OF ADMINISTRATION - COSTS - GENERAL PRINCIPLES
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - OTHER CASES - FAILURE IN PORTION OF A CASE
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - ORDER FOR COSTS ON INDEMNITY BASIS
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH DISCRETION OF COURT BELOW - IN GENERAL - WRONG PRINCIPLE - PARTICULAR CASES - DECISION AS TO COSTS
Consideration of the question of costs - where the Full Court upheld the order of the trial Judge pronouncing for the force and validity of the deceased's last will and testament - where the trial Judge rejected the defendant's case that circumstances of suspicion had been established that rebutted the presumption that would otherwise form due execution and would establish knowledge and approval - where the trial Judge concluded that even if the presumption did not arise, the evidence in the trial established knowledge and approval - where the trial Judge made no order as to costs between the plaintiffs and defendant - where, on appeal, the Full Court decided that circumstances of suspicion did in fact arise, but the Full Court agreed with the trial Judge's conclusions that, on the evidence, knowledge and approval had been established.
Held (the Court): The circumstances of suspicion that arose justified the defendant requiring the plaintiffs to discharge at trial the burden of proving knowledge and approval - order for costs made by the trial Judge set aside - costs of the trial of all parties to be paid out of the deceased's estate on an indemnity basis.
Held per Vanstone J and Stanley J (Gray J contra): Notwithstanding the defendant/appellant’s success on the discrete issue of whether suspicious circumstances rebutting the presumption in favour of due execution had been established, the appeal was doomed to fail - the defendant/appellant had no realistic prospect of overturning the trial Judge's findings that even if suspicious circumstances existed, the evidence clearly established knowledge, approval and testamentary capacity - there should not be an award of costs in favour of the unsuccessful defendant/appellant - the interests of justice do not warrant a further depletion in the estate by the making of an order that the defendant/appellant’s costs of the appeal be paid out of the estate - the plaintiff/respondent’s costs should be paid out of the deceased's estate on the basis of indemnity.
Hall v Carney & Ors [2012] SASCFC 76; Mitchell & Anor v Gard & Anor (1863) 3 Sw.&Tr. 275; Kostic v Chaplin & Ors [2007] EWHC 2909 (Ch); Ponder & Anor v Burmeister & Ors [1909] SALR 62; Twist & Ors v Tye [1902] P 92; Dean v Russel [1820] 3 Phil. 334; Browning v Mostyn (1897) 66 L.J.P. & M 37; Davies v Gregory (1872-1875) L.R. 3 P. & D. 28; Public Trustee v Hall [1937] SASR 252; Nock v Austin (1918) 25 CLR 519; Re Herbert Brothers deceased (1990) 101 FLR 279, considered.
HALL v CARNEY & ORS (No 2)
[2012] SASCFC 105Full Court Gray, Vanstone and Stanley JJ
GRAY J.
On 21 June 2012, the Full Court dismissed the appeal in the within proceedings of Grantley Thomas Aubrey Hall, the defendant and appellant. As a consequence, the Court upheld the order of the trial Judge made on 1 December 2011 pronouncing for the force and validity of the last will and testament of Kathleen Florence Elliott, being the script dated 17 November 2006.
On 14 December 2011, the trial Judge ordered that the costs of Vivienne Kathleen Carney, James Cavalier Douglas and Geoffrey Gordon Elliott, the plaintiffs in the proceedings and the respondents to the appeal, be paid out of the estate of Mrs Elliott on the basis of indemnity, such costs to be adjudicated or agreed. The Judge made no order as to costs between the plaintiffs and the defendant.
The trial Judge rejected the defendant’s case at trial that circumstances of suspicion had been established that rebutted the presumption that would otherwise form due execution and would establish knowledge and approval. The trial Judge went on to determine that even if the presumption did not arise, the evidence in the trial established knowledge and approval.
On the appeal, this Court took the view that circumstances of suspicion did in fact arise and that, as such, the plaintiffs were not entitled to rely on the presumption. However, the Court agreed with the trial Judge’s findings and conclusion that, on the evidence, knowledge and approval had been established. As a consequence, the appeal was dismissed. This Court gave the parties liberty to file written submissions on the question of costs.
It was submitted that the defendant had been successful in reversing the trial Judge’s conclusion that the earlier referred to presumption had not been rebutted. It was pointed out that the Court had concluded that circumstances of suspicion did arise such that the plaintiffs had the burden of proving that the late Mrs Elliott knew and approved of the 17 November 2006 will. The defendants pointed out that the trial Judge was informed that the parties had agreed the appropriate terms of orders as to costs and that, as a consequence, the Judge made the earlier referred to order without argument. No reasons were provided.
The defendant contended that the order as to costs made by the trial Judge should be set aside and that an order should be made that the defendant recover his costs of the trial out of the portion of the estate devised to Vivienne Carney and Geoffrey Elliott equally, and that there be no order as to the costs of the appeal.
Counsel for the defendant submitted that the general rule that costs follow the event has application in probate actions. However, it was pointed out that this general rule is not applicable in some circumstances.
The Court’s attention was drawn to the following observations of Sir James Wilde in Mitchell v Gard:[1]
… It is the function of this Court to investigate the execution of a will and the capacity of the maker, and having done so, to ascertain and declare what is the will of the testator. If fair circumstances of doubt or suspicion arise to obscure this question, a judicial inquiry is in a manner forced upon it. Those who are instrumental in bringing about and subserving this inquiry are not wholly in the wrong, even if they do not succeed. …
…
… the Court deduces the two following rules for its future guidance: first, if the cause of litigation takes its origin in the fault of the testator or those interested in the residue, the costs may properly be paid out of the estate; secondly, if there be sufficient and reasonable ground, looking to the knowledge and means of knowledge of the opposing party, to question either the execution of the will or the capacity of the testator, or to put forward a charge of undue influence or fraud, the losing party may properly be relieved from the costs of his successful opponent.
[1] Mitchell & Anor v Gard & Anor (1863) 3 Sw.&Tr. 275, 277-278.
The observations of Sir James Wilde were addressed by Henderson J in Kostic v Chaplin:[2]
Although Sir James Wilde framed his first rule in terms of blame and fault, it is in my view reasonably clear that he did not necessarily mean moral fault or culpability, but rather that the touchstone should be whether it was the testator's own conduct which had led to his will "being surrounded with confusion or uncertainty in law or fact". If that causal test is satisfied, it should not in my judgment matter for the purposes of the first rule whether the problem is one relating to the state in which the deceased has left his testamentary papers (for example where a will cannot be found, or where there is a question whether a will has been revoked), or whether the problem relates to the capacity of the deceased to make a will. I do not, therefore, read Sir James Wilde's formulation of the second rule as implying that an unsuccessful challenge to (or defence of) a will on grounds of want of knowledge and approval, lack of due execution or mental incapacity can never come within the scope of the first rule, but rather as being intended to provide guidance in cases where, on the facts, the first rule is not engaged.
[2] Kostic v Chaplin & Ors [2007] EWHC 2909 (Ch), [9].
In Ponder v Burmeister,[3] Way CJ discussed the principles applicable to determining the appropriate costs order in a probate matter. The following principles have been extracted from the reasons of Way CJ:
-The general rule is that costs follow the event.[4]
-Departure from the general rule is to be the exception, occurring only when there is adequate reason for such an order.[5]
-Costs should be awarded from the estate where the testator’s conduct has been the cause of the litigation.[6]
-There should be no order as to costs where the parties who failed in the litigation were reasonably led into the litigation by a bona fide belief in their case.[7] They must have acted in good faith and must have had reasonable ground for disputing or upholding the will. This award should be made even though the testator and the beneficiaries under the will were not to blame for the litigation.[8]
-In determining the question of costs, the court must view the facts from the position in which they were presented to the parties who failed in the litigation.[9]
[3] Ponder & Anor v Burmeister & Ors [1909] SALR 62.
[4] Twist & Ors v Tye [1902] P 92, 93-94; Ponder & Anor v Burmeister & Ors [1909] SALR 62, 99, 111.
[5] Twist & Ors v Tye [1902] P 92, 93-94; Dean v Russel [1820] 3 Phil. 334; Ponder & Anor v Burmeister & Ors [1909] SALR 62, 99-100.
[6] Twist & Ors v Tye [1902] P 92, 94; Ponder & Anor v Burmeister & Ors [1909] SALR 62, 99-101; Browning v Mostyn (1897) 66 L.J.P. & M 37, 37-38; Davies v Gregory (1872-1875) L.R. 3 P. & D. 28, 32-33.
[7] Twist v Tye [1902] P 92, 94; Ponder & Anor v Burmeister & Ors [1909] SALR 62, 99-100.
[8] Browning v Mostyn (1897) 66 L.J.P. & M 37, 37-38 as cited in Ponder & Anor v Burmeister & Ors [1909] SALR 62, 100.
[9] Twist v Tye [1902] P 92, 94.
Way CJ relied on a passage in the judgment of Sir James Hannen in Davies v Gregory.[10] There, his Honour posed the following question to determine whether costs should be paid from the testator’s estate: “Is the testator, by reason of his conduct, to be considered the cause of the reasonable litigation which has occurred after his death as to the validity of his will?”.[11] Sir James Hannen then considered the circumstances in which there is to be no order for costs. His Honour expanded on the above observations:[12]
… Where the facts shew that neither the testator nor the persons interested in the residue have been to blame, but where the opponents of the will have been led reasonably to the bona fide belief that there was good ground for impeaching the will, there will be no order as to costs. Of course the opponents must have taken all proper steps to inform themselves as to the facts of the case, but if, having done so, they bona fide believe in the existence of a state of things which, if it did exist, would justify litigation, then, although no blame should attach to the testator or to the executors and persons interested in the residue, each party must bear his own costs
[10] Davies v Gregory (1872-1875) L.R. 3 P. & D. 28.
[11] Davies v Gregory (1872-1875) L.R. 3 P. & D. 28, 32-33 cited in Ponder & Anor v Burmeister & Ors [1909] SALR 62, 101.
[12] Davies v Gregory (1872-1875) L.R. 3 P. & D. 28, 32-33 cited in Ponder & Anor v Burmeister & Ors [1909] SALR 62, 101.
In Public Trustee v Hall,[13] Angas Parsons J identified the principles discussed in Mitchell v Gard[14] as those applicable to the determination of an award of costs in a probate matter. In doing so, his Honour also referred, inter alia, to the decision of Way CJ in Ponder v Burmeister[15] and observed:[16]
The rules relating to costs have been classified as follow:— 1. If the litigation results through the fault of the testator or those interested in the residue the costs may properly be paid out of the estate. 2. If there be sufficient and reasonable ground looking to the knowledge and means of knowledge of the opposing party to question either the execution of the will or the capacity of the testator, or to put forward a charge of undue influence or fraud, the losing party may properly be relived from the costs of his successful opponent. 3. Unless the circumstances of the case bring it within one of the foregoing exceptions, the general rule that costs follow the event ought to prevail. …
[13] Public Trustee v Hall [1937] SASR 252.
[14] Mitchell & Anor v Gard & Anor (1863) 3 Sw. & Tr. 275.
[15] Ponder & Anor v Burmeister & Ors [1909] SALR 62.
[16] Public Trustee v Hall [1937] SASR 252, 253.
Counsel for the defendant submitted that this Court has held that there were circumstances of suspicion so that the presumption of knowledge and approval did not arise.
Attention was drawn to my reasons for judgment on the appeal, I reached the following conclusions:[17]
In the present proceedings there are two matters that, in my view, give rise to suspicious circumstances leading to the conclusion that the presumption of knowledge and approval does not arise. The two are related. Counsel for Grantley referred to the radical change in the testamentary dispositions of Mrs Elliott. Prior to November 2006, Mrs Elliott had always provided for, as near as practicable, an equal provision to Grantley and Vivienne. The will of 17 November 2006 represented a marked departure from this. On any view, the will provided an unequal division between Grantley and Vivienne. The benefits flowing from the will were disproportionately in favour of Vivienne. There is also the further change in the provision made in favour of Mr Elliott.
In the 19th edition of Williams, Mortimer and Sunnucks, Executors Administrators and Probate, the following appears:[18]
A radical departure from testamentary dispositions, long adhered to, requires explanation, especially if the person in whose favour the change is made possesses great influence and authority with the deceased and originates and conducts the whole transaction; and such facts may raise strong suspicion that the change was not the result of the free volition of the deceased. But that suspicion may be dissipated by proof of a change of circumstances since the earlier wills.
[Footnotes omitted.]
The radical changes to Mrs Elliott’s testamentary dispositions are to be considered having regard to the Judge’s earlier extracted findings of the existence of pressure and persuasion from family members. The substance of Grantley’s case was that Mrs Elliott was subjected to pressure and persuasion to change the terms of her will. To my mind, these considerations do give rise to circumstances of suspicion, calling on a need for the Court to consider all of the evidence and to make a finding without resort to the evidentiary presumption.
[17] Hall v Carney & Ors [2012] SASCFC 76, [33]-[34].
[18] Williams, Mortimer and Sunnucks, Executors, Administrators and Probate (Sweet & Maxwell Ltd, 19th ed, 2008) 195.
The parties propounding the script of 17 November 2006 carried the onus of establishing knowledge and approval. On this issue, I agreed with the conclusions of the trial Judge and observed:[19]
It is important to record that Grantley did not advance a case of fraud or undue influence either at trial or on appeal. He argued that circumstances of suspicion arose and that the onus lay on the executors to expel that suspicion and to positively satisfy the Judge that Mrs Elliott knew and approved of the contents of her will.
During the course of the appeal, counsel made it plain that this was the case presented by the plaintiffs at trial. It was accepted that there had been a radical departure from earlier wills, but it was said that that departure was being effected by an elderly lady of full mental faculty who had testamentary capacity and it was being effected for reasons she considered to be sound.
Mr Douglas’ evidence satisfied the Judge that Mrs Elliott was mentally competent, did have testamentary capacity, understood the terms of the will of 17 November 2006 and understood the variations that were being effected by the will. Mr Douglas inquired specifically that the will as drawn reflected her wishes and that she had not been subjected to any inappropriate influence. Mr Douglas’ evidence, given as a solicitor with expertise dealing with succession matters, was not challenged. It is unsurprising that the Judge would accept and act on this evidence. The Judge also had regard to the evidence of Ms McDonald about the care taken by Mrs Elliott to prepare herself for the giving of instructions.
Mrs Elliott provided an explanation to her solicitors for the changes effected by her 17 November 2006 will. Her daughter and two young grandchildren had made the Plympton South property their home and Mrs Elliott considered that the property had become their home.
The changes to the position of Mr Elliott appear to be a direct result of advice given by Mr Douglas that there was a need to make further provision for Mr Elliott. When regard is had to Mr Elliott’s position generally on an intestacy or as a claimant under the Inheritance (Family Provision) Act 1972 (SA), it would appear that this was appropriate advice.
I consider that the findings made by the Judge of knowledge and approval were open on the evidence. The Judge undertook a close analysis of the evidence and set out in clear terms the basis of his findings. There was no suggestion that the Judge had made any error in approach to the assessment of the evidence. To my mind, not only did the evidence support the Judge’s findings made, but those findings were the correct findings. The evidence of Mr Douglas in particular made out a clear case of knowledge and approval.
[19] Hall v Carney & Ors [2012] SASCFC 76, [37]-[42].
Counsel for the defendant referred to the decision of the High Court in Nock v Austin[20] where it was held that the circumstances surrounding the preparation of the will were suspicious and that this led to an inquiry as to whether the testator knew and approved of the contents of the will. The Court agreed with the trial Judge that the suspicions were dispelled. The Court ordered that the unsuccessful party have costs of the proceedings below paid out of the estate and that there be no order as to the costs of the appeal. Barton and Gavan Duffy JJ remarked:[21]
… We not only think that the circumstances led reasonably to an investigation in regard to the propounded document, but we think that those interested in the residue have been in large measure the cause of the litigation. Mr. Morgan should not have prepared a will which gave him a large share in the estate, and Mr. Austin has acted somewhat indiscreetly in not asking the testator to let him take the instructions to some uninterested solicitor. These were suspicious facts deserving consideration not only on the merits but on the question of costs. …
Isaacs J observed:[22]
… where a party having created suspicion in relation to a will under which he benefits is under the burden of clearing away that suspicion, then, as justice requires him to do so in the presence of any person interested should the suspicion be justified, he must, though eventually successful, ordinarily pay the costs of the person whose presence he has made necessary so far as his benefit extends.
[20] Nock v Austin (1918) 25 CLR 519.
[21] Nock v Austin (1918) 25 CLR 519, 525.
[22] Nock v Austin (1918) 25 CLR 519, 529.
Counsel also referred to the decision of the Court of Appeal of the Northern Territory in Re Herbert Brothers deceased and in particular, to the following observations of Kearney J:[23]
… It is clear that the circumstances as found by his Honour afforded the appellants reasonable grounds for opposing the wills, those circumstances involving suspicion as to whether the wills represented the true will of the testators; for those circumstances the respondent, though not personally responsible, was legally responsible.
Gallop J considered that by reason of the circumstances of suspicion, there were reasonable grounds for opposing the will and that this was a sufficient basis in the circumstances for an award of costs to be made.
[23] Re Herbert Brothers deceased (1990) 101 FLR 279, 316.
The defendant further submitted that a cause of the litigation was that Mrs Elliott had caused her will to be radically changed at a time when pressure was being placed on her to change her will. In all the circumstances, it was contended that this Court should follow the approach of the High Court in Nock v Austin.[24]
[24] Nock v Austin (1918) 25 CLR 519.
Counsel for the plaintiffs accepted that the basis of the costs order made by the trial Judge had changed as there was now a finding by the Court that suspicious circumstances existed which the plaintiffs were required to dispel. It was acknowledged that there had been a radical change to Mrs Elliott’s testamentary dispositions and that pressure had been placed on her to change those dispositions. Counsel accepted that the radical change to her testamentary dispositions could be described as “the fault of the testator”.
Counsel for the plaintiffs further submitted that there was a substantial body of material establishing due execution, testamentary capacity, knowledge and approval. This material was made available to the defendant well before trial. The material included a letter from a general practitioner confirming testamentary capacity, statements from the solicitor taking instructions for the execution of the will, Mrs Elliott’s past experience in making wills and the fact that the will was drawn by a fully independent solicitor. It was said that these matters should have caused the defendant to review his suspicions and not to oppose the will being admitted to probate and, in any event, not to continue any opposition after disclosure of relevant written material confirming the above matters more than 12 months before the trial.
Finally, it was pointed out that the Full Court had concluded that the evidence led at trial established knowledge and approval of the 17 November 2006 script. It was emphasised that the Court had concluded the Judge’s findings on the evidence in this respect were correct findings.
In my view, the circumstances of suspicion that arose justified the defendant requiring the plaintiffs to discharge the burden of proving knowledge and approval. The Court was required to assess the evidence presented and to reach a conclusion. A trial was necessary.
I would set aside the order for costs made by the trial Judge. I would order that the costs of all parties be paid out of the estate of the late Mrs Elliott on an indemnity basis. Such costs are to be adjudicated or agreed.
On the hearing of the appeal, the defendant was successful in establishing suspicious circumstances, but unsuccessful on the question of the evidence justifying an order that the 17 November 2006 script be admitted to probate. In these circumstances, I would order that the costs of all parties be paid out of the estate of the late Mrs Elliott on an indemnity basis. Such costs are to be adjudicated or agreed.
VANSTONE J: I have had the advantage of reading the reasons of both Gray J and Stanley J in draft.
This Court is in agreement that, like the plaintiffs/respondents, the appellant/defendant should have his costs of the trial, on an indemnity basis, from the estate. However, like Stanley J, I consider that the costs of the appeal stand on a different basis.
The evidence called by the plaintiffs before the single judge to establish the validity of the deceased’s last will was overwhelming. Although this Court departed from the trial judge’s analysis by characterising the dramatic changes seen in the last will as suspicious, the single judge’s central findings on the evidence were found to be, not only open to him, but correct. I agree with the reasons of Stanley J in respect of this aspect of the application.
The orders I would make are:
1.the orders of White J made on 14 December 2011 are set aside;
2.in their place it is ordered that the costs of the trial of all parties are to be paid out of the estate of the late Kathleen Florence Elliot on an indemnity basis, such costs to be adjudicated if not agreed upon;
3.the respondents’ costs of the appeal are to be paid out of the estate of the late Kathleen Florence Elliot on an indemnity basis, such costs to be adjudicated if not agreed upon.
STANLEY J: In this matter the Full Court dismissed the appeal from the judgment of the trial judge pronouncing for the force and validity of the last will and testament of Kathleen Florence Elliott. The learned trial judge ordered that the costs of Vivienne Kathleen Carney, James Cavalier Douglas and Geoffrey Gordon Elliott, the plaintiffs in the proceedings, be paid out of the estate on an indemnity basis. There was no order as to costs between the plaintiffs and the defendant.
The appellant (defendant at trial) now asks this Court to revisit the costs order made in relation to the trial and seeks an order for his costs on appeal to be paid out of the estate.
I adopt the analysis of Gray J of the principles relevant to an award of costs in a probate matter.
I also adopt his Honour’s exposition of the history of the proceedings and the relevant findings.
I agree with the conclusion and the reasons of Gray J in relation to the approach to be taken to the issue of the costs of the trial.
Unfortunately, I am unable to agree with the approach taken by Gray J to the issue of the costs of this appeal.
On appeal the appellant succeeded on the issue of suspicious circumstances but failed on the issue of knowledge, approval and testamentary capacity. As a result, the appeal was dismissed.
In my judgment, notwithstanding the appellant’s success on the discrete issue of whether suspicious circumstances had been established that rebutted the presumption in favour of due execution, the appeal was doomed to fail. This was because the appellant had no realistic prospect of overturning the trial judge’s findings that even if suspicious circumstances existed, the evidence established knowledge, approval and testamentary capacity.
In my view, no reasonable litigant, in the position of the appellant, in light of the trial judge’s findings, could have formed a bona fide belief in the existence of a state of things which would justify an appeal from the learned trial judge’s finding that the evidence established knowledge, approval and testamentary capacity. In my view, the evidence on this matter was overwhelming. The trial judge’s conclusion on this issue could not be seriously doubted. At that stage no reasonable grounds existed for continuing to oppose the will.
In these circumstances, costs should follow the event. In my view, in this case, the event is the outcome of the appeal rather than the determination of specific issues in the appeal such as whether suspicious circumstances existed. Whether the appellant succeeded in overturning the finding of the learned trial judge in relation to that issue, the appeal was doomed to fail if the appellant could not succeed on the alternate ground upon which the learned trial judge found against the appellant. An award of costs is discretionary. While it is a trite proposition that an unsuccessful party to litigation can in certain circumstances be entitled to an award of costs in their favour, this is not a circumstance in which I consider there should be an award of costs made in favour of the unsuccessful appellant.
I do not consider that the interests of justice warrant a further depletion in the estate by the making of an order that the appellant’s costs of the appeal be paid out of the estate. I would order that the costs of the respondents on the appeal be paid out the estate of the late Kathleen Florence Elliott on the basis of indemnity. Such costs are to be adjudicated or agreed.
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